THE TEETH IN REAL ESTATE LAW

The young couple was expecting their third child and they found the larger home they wanted. Because they could not sell their smaller home in time, however, the larger home was sold to another family who was ready to buy.

The couple’s disappointment from the failed transaction was palpable and to add to the stress, the young father’s job security was tenuous at best. As the tension within their small but happy home was mounting, the young mother began having symptoms that threatened the pregnancy for which the doctor ordered strict bed rest.

Within weeks the couple’s Realtor had their little home under agreement for full price and only days later, had them under agreement for a far better home than they had “lost”.
Life was good again and the young mother’s symptoms were improving. The sellers were moving to Colorado with their five small children and they were also thrilled to be “on their way.” There would be back to back closings of both homes and the movers had been scheduled.

Days before the closing, the young couple’s Realtor received a late night call from the sellers’ Realtor whose voice was shaking over the phone. “The deal is off. My clients can not go forward with the sale. You will likely see it in the papers tomorrow, so I’ll tell you that the wife is in jail. The husband just called to say that he will not be moving to Colorado. His wife ‘snapped’, was wielding a huge knife, and had to be taken in a straight jacket from the home. The children are with the grandparents and he is a mess. He won’t make any more changes right now and he told me to return your client’s deposit. I am so sorry for all of this.”

The young couple’s Realtor listened quietly to the distraught Realtor on the other end of the phone. Even as she listened to the heart wrenching details of a family in terrible crisis, she knew that nothing short of a meteorite demolishing that home would stop the transaction. She said “The closing will take place exactly as the parties have agreed.” The caller was incredulous and said “The seller told me the deal is off and he will not under any circumstances sell this home to your clients. The wife is in jail! What am I supposed to do?”

What that Realtor explained to her caller is important for all buyers and sellers to understand before they enter into a contract as serious as is the Real Estate Contract to Purchase. The Real Estate Contract exists to protect the parties and it comes with its own teeth. Two of these legal teeth are called “Specific Performance” and “Lis Pendens”.

These legal remedies derive from old English law during such times when the economy was rooted in the land. The remedy for breach of contract is almost always money. Real Estate, however, is so very unique, that money is not always an adequate remedy and the courts will order “Specific Performance” ……. “Hand over those keys as you agreed to do”.

Once a buyer has been informed that the seller intends to breach the Contract, the buyer can file a “Lis Pendens” (notice of action pending) with the Registry of Deeds. Title companies are not likely to underwrite a policy for the property in dispute in that event and the seller will not be able to close with anyone else.

The young couple’s Realtor said “I can only imagine how very difficult your clients’ lives are at this time and I can tell by your voice that you are beside yourself. My clients, however, have already lost one house and my young Mother has almost lost a pregnancy that has been made worse by the stress from near job loss as well. Their own home is now under agreement and they will be homeless themselves if your sellers do not meet their obligations and vacate that house before the closing. Tell your seller that life as he knows it will become far worse for him if he does not comply and if he has any doubt, he should check with his lawyer immediately. His home has already been sold, but he will face all the additional court costs and attorneys fees that will result in his challenging these laws.”

The closings occurred back to back and the family in crisis found adequate temporary housing.

The stories are endless and they are written under the subtitle “Life”. When the story involves Real Estate, however, understand that the Contract into which you enter is written under the subtitle “Law”.